Summary
- The meeting focused on changes to UK company car taxation from April 2025, including increases to benefit-in-kind (BIK) rates and new charges for electric vehicles (EVs) over £40,000.
- Detailed examples compared tax implications for petrol, hybrid, electric cars, and vans for company directors.
- Three common mistakes leading to HMRC investigations were highlighted.
- Four actionable tax strategies were provided to minimize company vehicle-related tax liabilities.
Action Items
(No specific dated action items or owners were given in the transcript.)
Overview of Company Car Taxation Changes (2025/26)
- From April 2025, BIK rates for petrol and hybrid vehicles are increasing, while EVs remain at a 3% BIK rate.
- New penalties: EVs with a list price over £40,000 incur a £390 supplement and a £190 annual road tax from April 2025.
- Personal use of a company vehicle means any use beyond strictly business purposes, including commuting and vehicles available for overnight use.
Comparing Tax Examples: Petrol, Hybrid, and Electric Cars
- Petrol Nissan Qashqai: 142g CO2/km, P11D value £30,000, 34% BIK band, resulting in £4,080 tax/year for a 40% taxpayer.
- Hybrid Qashqai e-Power: 19g CO2/km, P11D value £34,000, 9% BIK band, resulting in £1,224 tax/year for a 40% taxpayer.
- Tesla Model 3 (EV): P11D value £42,000, 3% BIK band, resulting in £504 tax/year for a 40% taxpayer.
- EVs remain the most tax-efficient, but new supplements and road tax reduce savings, especially for higher-priced models.
Van Taxation: Rules and Advantages
- Vans taxed at a flat rate, unaffected by P11D or CO2 emissions: £3,960 taxable benefit for regular vans, £720 for electric vans in 2025/26.
- For a 40% taxpayer: £1,584/year for regular vans, £288/year for electric vans.
- Significant tax advantages if the van is genuinely used for business—personal use triggers the flat-rate benefit charge.
Common Mistakes That Trigger HMRC Investigations
- Misunderstanding HMRC’s broad definition of “personal use.”
- Using company vans primarily for personal reasons (e.g., family transport).
- Failing to account for new EV penalties on cars over £40,000 from April 2025.
Recommended Tax Strategies for 2025/26
- Choose low-emission, low-P11D value cars (EVs under £40k, hybrids under £35k) to avoid new penalties and keep BIK rates low.
- Use salary sacrifice schemes for EVs to reduce both income tax and national insurance.
- For high-emission or expensive cars, purchase personally and claim business mileage at HMRC-approved rates (45p/mile up to 10,000 miles).
- Use a company van if genuine business use applies, as van taxation is predictable and inexpensive.
Decisions
- EVs under £40,000 and salary sacrifice schemes remain the most tax-efficient options for company vehicles in 2025/26 — rationale: These approaches minimize BIK, avoid new penalties, and offer predictable, low-tax outlay.
Open Questions / Follow-Ups
- No open questions or follow-ups identified in the transcript.